Libya: US diplomat says seizure of printed dinar in Russia would help reform war economy

Tripoli, Libya (PANA) - Former US Special Envoy to Libya, Jonathan Winer, has said that the seizure by the Maltese authorities of recently-printed Libyan dinar shipments from Russia "is an opportunity to reform the civil war economy in Libya" and can help the government impose its authority and face the attack launched by Marshal Khalifa Haftar to take over Tripoli.

Malta's seizure on 1 November of two full containers of Libyan currency printed by a Russian government company for the provisional government not recognised by the international community in eastern Libya "gives a clear idea of the importance of the economic aspects of the ongoing war in Libya", Mr Winer said, quoted by the Libyan online newspaper, "El Wassat",
which is published in Cairo.

According to the American diplomat, Libya has been living since the formation of the government of national accord in 2015, "a continuous division between the authority recognized by the international community based in Tripoli and the Eastern forces, clearly including a potential dictator in the person of Khalifa Haftar and his group from the former national army, militias, mercenaries and foreign forces that he called the Libyan Arab Armed Forces".

During this time, "the salaries of the Marshal's forces and many other Western forces were paid by the Libyan Central Bank from revenues from the sale of oil. Each party to the conflict also received additional income from other sources, including blackmail and trafficking in fuel and human beings," said Winer.

For him, "the continuous alternative dinar shipments from Russia to Haftar and the Eastern Central Bank section have allowed these (Eastern) authorities in the city of Beida to complete their budgets and thus do without serious political negotiations with the government of national accord".

These sources of financing "have become a means of financing the war launched by Marshal Haftar against Tripoli", the American diplomat argued, stating that "the Libyan authorities in the East had acknowledged that Russia made available 10 billion Libyan dinars between 2016 and 2018 or about 4 billion per year".

The former US envoy reported that Russian customs information indicated that Russia delivered 4.5 billion dinars in printed banknotes to the Central Bank in Benghazi with a slight but visible difference from the official Libyan currency printed in Britain between February and June this year.

This figure represents "more than twice the annual aid provided by Russia before", he argued, claiming that the 4.5 billion was delivered to Marshal Haftar only a short time before the latter's military campaign against Tripoli, which had entered its eighth month.

Mr Winer recalled that Malta reported that it had seized shipments based on the UN resolutions on Libya, which only recognise the national government of agreement established in the capital.

However, he deplored the fact that neither the Chairman of the Council of the Government of National Accord, Fayez Sarraj, nor the Governor of the Central Bank of Tripoli, Sadiq al-Kabir, had made any communication to inform about the illegality of the printed dinar in Russia, despite the thesis supported by observers on the liquidity crisis that such an announcement would have caused in the East, which would cause tribal unrest in the country.

The diplomat pointed out that the seizure of dinars printed in Russia by Malta comes at a time when preparations are underway to hold an international conference in Berlin, Germany on Libya, aimed at "opening negotiations on possible solutions to the civil war that has increased since Marshal Haftar's attack on Tripoli in April.

The conference, initiated by Germany, is blocked by the refusal of the Libyans or their sponsors (Turkey for the government of accord, Egypt, the United Arab Emirates and Russia for the Haftar forces) to agree on two main objectives: acceptance of an immediate ceasefire and the application of the arms embargo imposed by the United Nations and accepted in principle by these countries and others who, in reality, ignore them royally".

According to him, "the acceptance by these countries of the ceasefire and the supply of arms to the belligerents are necessary preconditions for the Libyans before the conference is held.

But the resolution of the flow of arms in Libya, although necessary, is not sufficient to ensure the organisation of meaningful political negotiations as long as both sides have the means to finance the war.

Even if it is impossible to convince Russia to stop supplying Haftar and the Eastern authorities with illegal currency, which is still not banned, the American diplomat still believes that "the Libyan authorities have the means to impose their authority and coerce Haftar's attack, which has now become mired.

More clearly, Mr Winer said that Sarraj and al-Kabir "are in a position to announce the illegality and non-convertibility of the dinar printed in Russia from, for example, 1 January 2020 and that it will be more accepted by the Libyan Central Bank".

To avoid a liquidity crisis in the East and in all parts of the country, the US diplomat suggested that "the Libyan Central Bank should print billions of dinars by the British company authorised to exchange them, at equal value, with printed dinars in Russia in circulation in the country before the end of the prearranged but briefly extended deadline".

This will allow the government of national agreement and the Central Bank to control the currency and economic sovereignty while allowing Libyans wherever they are to obtain the amount they need to live their lives normally, Jonathan Winer said, adding that the approach "is likely to deprive Marshal Khalifa Haftar of a decisive source of finance from abroad his budget which he uses to continue the blockade against Tripoli".

"The ban on the printed dinar in Russia will facilitate the gathering of all belligerents around the diplomatic negotiating table and the holding of the Berlin conference and perhaps progress in securing the ceasefire as a prerequisite for any more sustainable negotiations," he said.

To obtain international support for enforcing the ban on printed dinar in Russia, the government of national accord and the Central Bank "must carry out economic reforms, including replacing fuel subsidies with direct payments to citizens," argued the former US special envoy to Libya, adding that current fuel subsidies are greater than the sums invested in education and infrastructure sectors.

"This fundamental reform, which is likely to constrain the growing traffic of fuel by criminals, has regularly been blocked," he said, adding that "there is a simple way to implement the reform. According to him, it is a question of allowing the National Oil Company to use the capital provided for fuel subsidies to pay Libyans with national identity cards.

This reform will have three advantages: "to stop losses due to trafficking, to ensure that subsidies benefit Libyans and to show Libyans the importance of the existence of a government that respects its commitments by giving them benefits from the wealth that belongs to them".

This approach will also "help the government of national accord in its upcoming political negotiations to unify the country, for the distribution of wealth for the benefit of all regions and to replace militias with the unified professional military and police institutions that the country needs to ensure its security and stability in a sustainable manner," the American diplomat concluded.

-0- PANA AD/IN/BEH/MTA/VAO 8Nov2019